Buffalo Grove considers merit-based pay increases, bonuses

Experts, other towns say plan would be rare in area

Buffalo Grove's proposal for a merit-based pay plan includes a bonus system that experts say has been done rarely – if ever — by a local municipality.

The "heart" of the new system involves awarding village employees at a rate that reflects their performance – something that would replace the across-the-board pay bumps more common in municipal government, said Arthur Malinowski, the village's director of human resources.

It's hoped the bonus system will boost morale, create incentives for hard work and – perhaps most importantly – weed out undesirable employees.

"[We] are very big proponents for rewarding people for the good work that they do based on performance that is measurable and attainable," Malinowski said. "This would be a system that would not be as common in the public sector."

Village managers and other top administrators are commonly offered bonus clauses in their contracts, but Gerald Gabris, a professor at Northern Illinois University and an expert on local government, said he's never heard of a municipality in the Chicago metro area with a system for lump-sum bonuses for regular employees.

"It will be difficult to implement it," he said. "I'm not aware of any other municipalities that are using this kind of merit-based bonus system. Buffalo Grove is somewhat unique in doing that."

Buffalo Grove's "pay-for-performance" plan, if approved, could begin in January with a salary increase pool and a schedule determined annually by the village manager, according to a draft of the proposal.

A system to pay out one-time bonuses of up to $5,000 also would be put into place.

Buffalo Grove officials said that as part of the process of developing the bonus plan, they looked at how neighboring cities handle pay increases.

The City of Highland Park offers the typical tenure-based pay increase system and does not give bonuses, said Ghida Neukirch, deputy city manager.

Deerfield offers its non-union employees a merit-based salary bump in addition to a cost-of-living increase, said Andrew Lichterman, assistant to the Deerfield village manager.

Of a bonus system, Lichterman said: "That's unique. I've not heard of that."

The Buffalo Grove Village Board discussed the pay concept last week at a meeting in which program cuts that may affect the annual holiday lights display and police K-9 unit also were considered – something at least some officials found jarring.

"An hour ago, we didn't have money for dogs and lights, but now we have money for bonuses," said Trustee Beverly Sussman, a former school teacher. "I was never really convinced about having merit pay or merit bonus."

A majority of the other trustees, however, said they were positively disposed to the idea, though they did request more board oversight. It's missing from the current draft, but Malinowski said he expects the money for the program will be tied to the annual budget process.

"I think there is a perception in the general public that public employees in general get this automatic raise. I think what we have here is counters that," said Trustee Mike Terson, who also works for the Buffalo Grove Park District. "We are rewarding people who do a spectacular job and that makes them want to do an even more spectacular job."

Since the recession, the village's 140 or so non-union employees have received salary increases tied to a cost-of-living adjustment, which averages 1 or 2 percentage points annually, Malinowski said.

In 2010, Buffalo Grove employees got no pay bumps because officials said the village could not afford even a modest increase. And at the same time positions were being cut, workers were taking on more responsibilities, Malinowski said.

Still, it's unclear if the new merit-based system -- which would replace the current cost-of-living increases -- will be a money-saver.

"It's a reward system, but it's also holding people accountable, so we'll have to see the program when it's finalized (and) in practice to see if there's savings," Malinowski said. "I don't think it will cost the village more to implement."

The concept calls for a supervisor proposing a merit-based award for an employee, a proposal that would then be reviewed and approved by human resources and the village manager.

The budget for both the salary increases and the bonuses would vary from year to year, depending on village resources, officials said.

A salary increase would be tied to the employee's annual performance evaluation and any one-time, lump-sum bonuses would be issued for "exceptional" and measurable accomplishments such as saving the village money or initiating a special project.

The preliminary proposal includes general guidelines, but officials said each merit award would be considered on a case-by-case basis. There would be no specific targets or bonus quotas to meet in the program.